The Logic Behind Irresistible Lure of Jio’s launch of ‘Free’ data offer…
Reliance Jio drastically changed user behaviour, revolutionised telecom sector by offering six months ‘FREE’ data and voice service. We, Indians became the world’s biggest consumer of data.
People who were comfortable with their existing network and who could afford whatever plans they were paying already, waited for hours in queues to get Reliance Jio Sim. Most of us bought an additional phone to exploit the new JIO service. Suddenly, we played more videos, listened to more music, watched more ‘live sports’. Grandparents replaced voice calls with video calls. Parents’ calling time while on roaming increased. Some of us upgraded from watching TV serials to web series shows. College students turned extremely charitable, sharing their data through wifi hotspot. With unlimited data, sometimes users spent long nights in googling unrelated and irrelevant information. Songs were recklessly downloaded. Hours spent on playing online games increased exponentially. Social media usage grew multifold. ‘Charging the phone battery’ once in two days turned into ‘charging twice a day’ for some of us. Our behaviour changed so much that it became difficult to get rid of it. Jio not only introduced a new behaviour but sustained it by extending the period of free service and then offering ultra-low tariff plans.
Jio acquired more than 100 million customers in those initial six months which would have taken a decade in normal circumstances. The reason — The two magic words — FREE and UNLIMITED.
Would you have bought Jio Sim if the service was heavily discounted than being just free? For example, if they offered Unlimited Data and Voice Service for Rs.75, Rs.100 or Rs.150 per month … Would you have taken it? Do you think 120 million people would have subscribed Jio at this cost? Do you think you would have stood in line for hours to get the Jio sim card at a discounted price? Do you think this minimal cost would have prompted you to buy another phone to utilise Jio services?
If Discounted? — If Jio was at a discounted price rather than being free, most of us would have explored the downside of purchasing the Jio service — Some people would have waited to find out about the network connectivity issues, data speeds. Many would have seriously considered whether they have enough time to watch the extra movies, play games or whether is there any burning need to increase their online data consumption.(When we can watch cricket, live on TV or see the live scores in cricket websites, we might not have opted for live streaming of cricket matches). Most of us would not have rushed to buy VoLTE supporting device or any other secondary phone, as fear of loss would have impacted our minds more than the gains we would make. For a ‘free’ item, the loss is generally invisible as we rarely do in-depth research. The majority of earlier subscribers have used the Jio Sim as a secondary sim and not as a primary sim. This shows that it was not something a necessity or it was not satisfying an important need but we were all lured by the word ‘FREE’.
It’s not actually free — We may be acquiring the service for ‘Free’ but we do not realise that we are paying our valuable time. As Dan Ariely states, “Time spent on one activity, is time taken away from another activity”. If we have spent hours waiting in a line to get our Sim card or watching videos or social media or playing online games because of the unlimited ‘free’ data offer, then we are missing out something else to do with that time. We fail to see what we pay when we hear ‘free’.
Many still blame ‘Indian Mentality’ for Jio’s success — going always for cheaper or free items. Is it just an ‘Indian’ thing or a ‘Global Mentality’? or in precise words ‘Human Nature’?.
Did the word ‘FREE’ blind our rational mind? Did the word ‘FREE’ blind our decision making? Did the word ‘FREE’ allow people to exploit us and change our behaviour without our knowledge as in ‘Jio’s’ scenario? Would Jio change our behaviour if it was heavily discounted than being free?
Dan Ariely mentions an experiment in one of his books. In the experiment, they offered two kinds of chocolates to customers — Lindt truffles(Prized high, creamy and irresistibly tasty chocolate) and Hershey’s kisses(normal chocolates) with a condition of “One chocolate per customer”. Lindt truffles cost 30 cents. Dan Ariely’s team set a discounted cost for both the chocolates — Lindt truffle at 15 cents and a Kiss at one cent. Lindt truffle had a massive discount compared to Kiss. The rational mind would definitely choose Lindt truffle as it has a better taste and a huge discount(Provided affordability and taste preferences are not an issue). As expected, 73% of the subjects chose the truffle and 27 percent chose a Kiss.
Now the experimenters wanted to see how ‘Free’ might change people’s decisions. They offered the Lindt truffle for 14 cents and the kisses free. Just an additional 1 cent discount applied equally to both the chocolates! Would people behave differently? To everyone’s surprise 69% percent people chose one ‘Free’ Kiss(up from 27%) and they gave up the opportunity to get the Lindt truffle for a very good price. People who chose Lindt truffle dropped from 73 to 31 percent. What a fall! This time people did not make a rational cost-benefit analysis when one product is offered ‘Free’. Don’t blame Indians! Blame Human Nature!
‘Free’ or ‘Zero Cost’ interacts directly with our emotional mind and our decisions are all controlled by this mind. The word ‘Free’ can make things incredibly appealing though we would never consider purchasing them. Sometimes, it could lead to a bad decision. When something is announced ‘Free’, step back, remove the ‘Free’ association from the product, do the cost-benefit analysis and then decide.
References: Predictably Irrational by Dan Ariely.